No plans to cancel power sector privatisation, says government

• Govt moves to democratise meter provision
The Federal Government has ruled out the possibility of revoking licences given to private sector investors to run the country’s power sector.

The Minister of Power, Works and Housing, Babatunde Fashola, gave the assurance yesterday at the Policy Dialogue on the Power Sector, organised by the Lagos Chamber of Commerce and Industry (LCCI).

According to him, the government remains committed to honouring the contract it entered into with the investors.

He noted that anything otherwise would send a wrong signal to prospective local and foreign investors indicating uncertainty in the country’s business environment.

The minister added that any cancellation would further reduce the country’s ranking in global competitiveness.

His words: “Cancellation of the exercise will only send a negative message to prospective investors in the country’s power sector. People are asking for cancellation because they are not seeing the immediate benefits of the privatisation programme. If we revoke it, investors will leave the country and would even tell others that Nigeria is not a reliable destination for investment.

“As we are all aware, there have been comments about how effective privatisation has been in the power sector and some people have called for its cancellation, which I disagree with.

“However, I agree that there are problems. I understand that four years after privatisation are a transition period, and some more work needs to be done before the expected benefits come to fruition.”

Fashola added: “Let me set the context by once again reminding all of us that the power sector has been privatised and is largely in the hands of the private sector.”

He said the work that should be done was largely the responsibility of the private sector.

The minister stressed the need for institutions at federal and state levels to implement extant laws, enunciate policies and take actions that should help the investors play their part effectively.

“Our roles in this regard are well set out in the Electric Power Sector Reform Act 2005 pursuant to which the privatisation of the power sector took place,” he stated.

Fashola asserted that meter provision is not a monopoly of distribution companies (DisCos), as its supervision falls within the mandates of the Nigerian Electricity Regulation Commission (NERC) and Nigerian Electricity Management Service Agency (NEMSA).

To democratise access, he said government would support the provision of the product.

Fashola continued: “Anyone licensed by NERC may provide meters, pursuant to the provisions of the Electric Power Sector Reform Act 2005.

“The democratisation of meter provision is intended to reduce conflict between customers and DisCos, reduce losses in the sector and assist the electricity firms which cannot afford to fund meters.

“The eligible customers include large power consumers such as state governments, industrial clusters etc.

“Eligible customers may apply to the NERC to privately acquire power, independent of DisCos. It was noted that the negotiated price for large consumers would likely be lower than the N80 per kwh or more (the current average cost of diesel generators) and may be higher than the N30 per kwh of grid power.

This will occur only on a willing buyer, willing seller basis.”

The Chairman, Egbin Power Plc., Kola Adesina, stressed the need for an appropriate gas-pricing regime for the sector.

According to him, the move would help reduce tariff and make electricity affordable.

He said: “There must be appropriate pricing in the power sector value chain to achieve regular electricity in the country. To industrialise Nigeria, there is the need for regular electricity and you cannot achieve industrialisation when the cost of power is very high. To achieve low tariff, government must reduce the cost of gas-to-power plants.”

He called on the government to honour its side of the privatisation agreement by putting in place cost-reflective tariff, recalling that “at the time of privatisation, the standards were created and they have not been met.”